Articles Tagged: Bankruptcies

A federal bankruptcy judge on Friday swiftly shutdown a request to pause implementation of a Mercy Iowa City liquidation plan that exposes its former financial manager MercyOne to future lawsuits.

MercyOne — former managing partner of the bankrupt Mercy Iowa City — plans to appeal a judge’s decision earlier this month to confirm a Chapter 11 liquidation plan for the insolvent community hospital that leaves MercyOne vulnerable to lawsuits.

A federal bankruptcy judge on Friday afternoon confirmed a Chapter 11 plan of liquidation for the former Mercy Iowa City hospital, despite push back from its former managing partner MercyOne — which now, under the plan, remains exposed to future lawsuits.

Facing concerns and objections from pensioners and other entities owed millions in “unsecured” claims, a bankrupt Mercy Iowa City – by means of attorneys burning through thousands by the hour – have negotiated a proposal for how to distribute the hospital’s limited resources.

With the $28 million sale of Mercy Iowa City to the University of Iowa just over two weeks from closing, the 150-year-old community hospital’s largest bondholders are seeking court affirmation they will get the vast majority of that money “promptly.”

Among the complexities of a Mercy Iowa City bankruptcy sale to the University of Iowa is its electronic medical system transition – with any gap or abrupt termination of system operations posing “significant” threat to Mercy and its patients.

A Bremer women who declared bankruptcy concealed $147,000 inheritance from her creditors was sentenced to 2 months in federal prison. A trustee discovered she had received the inheritance and she was required to pay her creditors.

In total so far, a Chicago law firm representing Mercy Hospital in its bankruptcy case has accumulated $6.2 million in fees against a hospital that — since its Chapter 11 petition through Oct. 31 — had reported a $13.7 million operating loss.

With a bankrupt Mercy Iowa City already inciting objections to the more than $1 million it's accrued in attorney fees tied to Chapter 11 proceedings, the hospital’s interim management and restructuring firm last week submitted another $1 million bill.

Although Mercy Iowa City – given its pending sale to the University of Iowa – now has more resources to pay all the attorneys and restructuring agents it hired to navigate its bankruptcy, a U.S. trustee has objected to fees for one law firm, arguing the amount “shocks the conscience.”

With little debate or discord — after months of twists and turns and objections — a U.S. Bankruptcy Court judge on Monday approved the sale of Iowa City’s only community hospital Mercy Iowa City to the University of Iowa for $28 million.

After declaring its largest bondholder Preston Hollow winner of a bankruptcy auction for its assets last week — and issuing a news release to that effect — Mercy Iowa City now is refusing to move forward with the transaction and transition to new ownership, confirming Friday it has “reached an impasse.”

Without explanation — after a long day in attorney offices in downtown Chicago — Mercy Iowa City at 6:30 p.m. on Wednesday announced the historic auction for its assets as part Chapter 11 bankruptcy proceedings would be continued “to a later date.”

A sale for the assets of Iowa City’s 150-year-old Mercy Hospital was underway in Chicago on Wednesday afternoon — although details about bidders and results weren’t immediately made public.

Mercy Iowa City has received at least one bid to compete with the University of Iowa’s $20 million offer to purchase substantially all its assets as part of the hospital’s Chapter 11 bankruptcy — triggering an auction on Wednesday morning in Chicago.